P9-commentary.txt

                      Protocol update commentary

Protocol Version: 9
Builds on Protocol Version: 8

Protocol version 9 introduces Protocol-Level Tokens (PLTs), which enable
chain-native support for tokens other than CCD, without reliance on smart
contracts. Since they are implemented natively, PLTs can be cheaper and
more efficient than smart-contract-based tokens, which incur runtime
overheads.

Protocol-Level Tokens are intended to provide a high-assurance platform
for implementing tokens, such as stable coins. Since PLTs are built in
to the Concordium blockchain, users are not required to trust third-party
smart contract implementations.

While there are advantages to protocol-level tokens, they also come with
certain limitations. Firstly, PLTs can only be created by a
chain-governance operation. While any user can create a CIS-2 (smart
contract-based) token, PLTs can only be created if sanctioned by the
Concordium governance process.

Secondly, the functionality of PLTs is currently limited. Tokens can
only be held on accounts, and not by smart contracts. There are no
mechanisms to assign or delegate control of PLTs held on an account
(other than by transferring them), and there is no mechanism for
supporting sponsored transactions. However, future protocol updates
may introduce additional functionality, including the possibility of
upgrading PLT functionality without the need for a further protocol
update.

Since PLTs are designed with future upgradability in mind, the
interface to PLTs is built for extensibility. Core to this is the
concept of a Token Module: the specific implementation behind any
given PLT. At protocol version 9, only one Token Module implementation
is supported, but in future there may be more, either adding
general functionality to all PLTs, or providing specialized
functionality tailored to individual PLTs. To allow for extensibility,
the Token Module interacts with the outside world through CBOR-encoded
data [1]. Transactions, events, reject reasons, and state query responses
all use CBOR-encoding. This allows for future token modules to support
additional transaction types, events, etc., without requiring changes
to the Concordium node's interface. The CIS-7 standard [2] for PLTs
defines the interface.


                        References

[1] RFC 8949: Concise Binary Object Representation (CBOR),
    C. Bormann and P. Hoffman
    <https://www.rfc-editor.org/rfc/rfc8949.html>

[2] CIS-7: Protocol-level Tokens (PLTs)
    <https://proposals.concordium.com/CIS/cis-7.html>